Home sales are beginning to stall as buyers hit their limit

Home sales fell 1.2% from May to June, the largest drop at this time of year on record since at least 2012, according to a new Redfin study released this week.

The national median home-sale price hit a record high of $386,888, up 25% year over year, but a slight decline from the record of 26% in May. The number of homes for sale fell 28% year over year from 2020, and the typical home sold in just 14 days — a record low and, down from 39 days in June 2020.

Homes sold for their highest prices and at their fastest pace on record, but measures for market speed and competition seem to be at or near peak levels for this year, said Daryl Fairweather, Redfin’s chief economist.

“In June we entered a new phase of the housing market,” Fairweather said. “Home sales are starting to stall because prices have increased beyond what many buyers can afford. This summer I expect home prices to stabilize as more homeowners list their homes, realizing they likely won’t fetch a higher price by waiting longer to sell.”

Fifty-six percent of homes sold above their list price — another record high, up from 27% a year ago. And the average sale-to-list ratio hit 102.6% in June, meaning homes are selling on average 2.6% above asking price.

Regionally, seasonally adjusted active listings fell 28% year over year to their lowest level on record, and only two of the 85 largest metros tracked by Redfin posted a year-over-year increase in the number of seasonally adjusted active listings of homes for sale: Milwaukee (+4%) and New York (+1%). The biggest year-over-year declines in active housing supply in June were in Baton Rouge, Louisiana (-57%), North Port, Florida (-52%) and Greensboro, North Carolina (-46%).

Median sale prices, however, increased from a year earlier in all of Redfin’s 85 largest markets. The largest price increase was in Austin, Texas (+43%), where a typical three-bedroom, two-bathroom suburban home sold for about $485,000 last month — up from about $340,000 a year earlier, according to Jennifer Hoffer, Redfin’s market manager in Austin.

“Home price growth over the last few months in Austin has been astronomical,” Hoffer said. “There has been a perfect storm of factors driving up price here with tech firms like Tesla, Amazon and Oracle announcing expansions in Austin, celebrities relocating here, and overall a whole lot of really great press for the area.”

The next biggest price increases were seen in Lake County, Illinois (+31%) and Phoenix (+30%). The smallest price increase was posted in San Francisco, where prices were up only 2.6% from a year ago.

Finally, new listings fell from a year ago in 15 of the 85 largest metro areas. The biggest declines were in Baton Rouge, Louisiana (-51%), Allentown, Pennsylvania (47%) and St. Louis, Missouri (-41%). New listings rose the most from a year ago in San Jose, California (+38%), Tacoma, Washington (+35%) and Milwaukee, Wisconsin (+32%).

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